Open Inventory Sourcing
Fouad Estephan
Euroclear Collateral Conference
Tuesday, 13 May 2014
Collateral Highway
OIS value proposition
CSDs
CCPs
agents
central banks
custodians
banks
Collateral
Transformation
Optimise the management of your domestic inventory
•
efficiently pool your domestic collateral resources to be used in triparty
•
maximise financing of domestic assets in triparty without impacting settlement and
custody in the domestic markets
•
reduce operational burden of managing domestic inventory to be used in triparty
2
OIS coverage
Current markets and roll-out
Netherland
Belgium
Germany
UK
Italy
Euroclear Bank
Triparty
France
USA
Singapore
Japan
Active
Spain
Hong Kong
Q4-2014
Q1-2015
2015-16
Covering Equities and Fixed Income securities
3
Open Inventory Sourcing service
Automated inventory management
Agent
EB
Client
②
ISO messages & reports
①
Open Inventory Sourcing
EB ICSD
Client /
Giver
③
Taker
Fully automated and dynamic inventory management service:
1.
2.
3.
Calculate your available positions in each market that you are subscribed for
based on reporting received from your agent
generate automatically matching settlement instructions that transfer the securities
from your domestic account to your Euroclear Bank account
4
combine OIS with the powerful optimisation feature in triparty
Open Inventory Sourcing service
Consolidating fragmented pools for optimisation
Open Inventory Sourcing
Collateral Management & Optimisation
Domestic markets
Client@Italy
Client@Spain
Client@UK
Client@France
EB ICSD
Client@EB
Pool of
securities
collateral
Repo – Set1
Bank 1
Repo – Set 2
CCP1
Repo – Set 3
Asset
Manager
Liquidity – Set 4
Central
Bank
Derivatives – Set 5
CCP2
Sec. Lending – Set n
Lender
Client@Germany
Client@USA
Client@Japan
Fixed Income
&
Equities
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Main features
Granular selection of your domestic securities
Available
criteria
Set-up – granular OIS eligibility criteria:
• Rating
• Indices
• Instrument nature (debt, equity)
• Instrument category (bond, bill, note,...)
• Issuer type (sovereign, supranational, corporate,…)
• Issuer country
• Securities type (ABS,…)
Options:
• Minimum amount to be left on domestic a/c
• Maximum amount to be sourced into triparty
• Applicable to pool of securities with prioritisation features
• OIS can generate FoP or DvP transactions
6
Main principles in each OIS run
Priority to your activity on the domestic market
Automatic processes
Integrated systems ensure your
domestic needs are always fulfilled
• In each OIS run, securities required for
settlement on the domestic market are:
►
excluded from the pool of available
securities, and / or
►
delivered back from your EB account
to your domestic account if already
used in triparty
• Securities in excess (not needed for
domestic settlement or corporate
actions) are moved from your domestic
account to your EB account within the
limits you have defined
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Main principles in each IM run
Corporate Actions
Automatic processes
• For Fixed Income, corporate events can
be serviced by EB as currently done
• For Equities, corporate events are usually
serviced by the agent. Therefore, when a
CA is detected, equities are:
Integrated systems ensure your
domestic needs are always fulfilled
►
excluded from the pool of available
securities, and / or
►
delivered back from your EB account
to your domestic account if already
used in triparty
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Operational set-up
Reconciliation
•
•
•
The OIS sends external settlement instructions and matching MT
540/542 messages on your domestic account
OIS settlement instructions are reported in standard settlement
reports with specific client references
For reconciliation purposes, you may integrate in your system
those OIS specific references
Euroclear Bank
Agent
e.g.
IMXI123456713012
e.g.
IMDI123456713012
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Operational day
Example – Spain
S
S-1
Market cut-off time
16:30
08:00
10:00
14:25
15:30
AS
AS
AS
AS
AS
AutoSelect processes
Inventory Manager runs
16:00
17:00
16:20
07:50
09:50
14:15
15:20
IM
IM
IM
IM
IM
16:10
15:10
Recommended deadline for clients to put
settlement instructions on the domestic market
Additional IM runs can be set up if needed
10
For internal use
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